The Debate over Beverage Taxes

In the debate to pay for comprehensive health care legislation, one idea that would only partially pay for reform is the idea to tax beverages.Specifically, some members of Congress have proposed leveraging an excise tax on sugar-sweetened beverages and changing the excise tax on alcoholic beverages to an equal tax on beer and wine based on alcoholic content.

The new sugar-sweetened tax proposal, which is specifically aimed at sodas, was recently estimated by the Congressional Budget Office to raise $50 billion over ten years, a small percentage of the $1 trillion the comprehensive bill is expected to cost.But proponents of the excise tax argue that in addition to providing some savings for health care legislation, it would promote public health and save on long-term care costs.In a letter to Senate Finance Committee Chairman Max Baucus, the American Public Health Association and a coalition of groups argued: “While many factors contribute to weight gain, soft drinks are the only food or beverage shown to have a direct link to obesity, which in turn can lead to hypertension, strokes, heart attacks, diabetes, cancer, arthritis, and other health and psychological problems.”

Other associations have argued that the excise tax would unfairly impact lower-income Americans and would not deter consumption in the long term.American Beverage Association (ABA) President & CEO Susan Neely, CAE told the Wall Street Journal, “Taxes are not going to teach our children how to have a healthy lifestyle.”ABA is working with the Alliance for a Healthier Generation (of which the American Heart Association is a founder) to promote its “School Beverage Guidelines” to promote healthy drink choices in schools.

By contrast, a federal excise tax is already imposed on alcoholic beverages, but at different rates for beer, wine, and spirits.Under the funding proposal, the excise tax would be increased and the tax made uniform based on the alcoholic content of the beverage.Mothers Against Drunk Driving (MADD) supports the proposal as “a means of covering the cost to society caused by misuse of alcohol.”

The proposal has drawn criticism from trade associations representing the industry.The Distilled Spirits Council of the United States opposes the tax because it would hurt industry employment.“Forcing hundreds of thousands of waiters, waitresses, bartenders, and busboys into the unemployment line is not the way to reform our nation’s health care system,” it said in a statement.

What do you think?Are beverage taxes a viable way to pay for comprehensive health care reform?